Japan's economy surges ahead in first quarter

---

TOKYO, June 11 (AFP): Japan said today its economy powered ahead at a 4.0-per cent annualised pace in the first quarter of 2008, but analysts warned tougher times lie ahead due to high oil prices and slowing US growth.

It was the third straight positive quarter for the world's second-largest economy, which is gradually recovering from a series of slumps since the 1990s. Growth was also much faster than the initial estimate of 3.3 per cent.

Gross domestic product (GDP) grew by 1.0 per cent in the three months to March from the previous quarter, up from a preliminary reading of 0.8 per cent, according to the cabinet office. The upgrade was mainly due to higher-than-expected investment by companies in new equipment and factories, with corporate capital spending up 0.2 per cent from the previous quarter, against an initial estimate of a 0.9 per cent drop.

Consumer spending grew 0.8 per cent, housing investment jumped 4.6 per cent and exports expanded 4.0 per cent.

But many analysts warn that a slowdown is inevitable in the second quarter of 2008 as the global economic climate chills due to the economic problems in the United States sparked by a housing slump and a related credit crunch.

"The data confirmed risk factors going forward," said Hideki Matsumura, economist at Japan Research Institute, pointing to the return of inflation due to soaring energy and raw material import costs.